Renewable Energy Resilience

Nanogrids, Microgrids and Virtual Power Plants

Expert on new energy business models such as nanogrids, microgrids and virtual power plants, covering cutting edge energy and environmental issues for over 25 years.

Alaska: World's Market Leader on Microgrids

Rather than viewing microgrids as a threat to public safety due to intentional islanding and/or departing customer load on long-term revenue projections, a small, but growing number of utilities view the microgrid they may own and operate – a utility distribution microgrid (UDM) – as the next logical extension of their efforts to deploy smart grid technology. As I’ve noted earlier, the developed world can learn interesting lessons from the developing world.

Navigant Research’s base scenario shows that the total UDM market represents over $2.4 billion of economic activity today, with the bulk of this investment flowing into projects located in the Asia Pacific region. As has been noted in other Navigant Research reports, North America is the overall market leader. Yet when it comes to utilities, both Asia Pacific and Europe are ahead in near-term deployments and related implementation revenues. All told, this UDM market is forecasted to reach $5.8 billion under the base scenario in 2023, revenue compounded annual growth rate (CAGR) of 10.2%.

However, there is one important exception to this market generalization: Alaska.

“Over the last decade, Alaska has quietly emerged as a global leader in the development and operation of micro grids,” proclaims Gwen Holdmann, director for the Alaska Center for Energy and Power at the University of Alaska Fairbanks (ACEP).  She noted a particular focus has been hybrid conventional-renewable-storage systems, networks that have “logged more than 2 million hours of continuous operating experience for these types of systems.” The state boasts a portfolio of somewhere between 200 and 250 permanently islanded microgrids ranging from 30 kW (the size of a city block) to large remote hydro systems over 100 MW in size. These microgrids, many in operation for over 50 years, provide electric power service exclusively to isolated rural populations.  Total capacity exceeds 800 MW, the largest installed base of microgrids in the world today (though China may overtake Alaska by the end of next year.)

Holdmann clearly takes pride in what Alaska has done. While other pundits may point to New York, California or Hawaii as the centers of North American microgrid development, Alaska has been developing cutting edge microgrids for quite some time. “The State of Alaska alone has invested over $250 million in developing and integrating renewable energy projects to serve these microgrids, – far more per capita than any other state in the country,” Holdmann continued.

The advent of advanced technology deployment to these rural systems has forced Alaska utilities and developers to become expert in their development and operation long before they became vogue elsewhere. By far the greatest challenge was, and remains, the high-penetration integration of intermittent renewables such as solar, wind, and hydrokinetic, with traditional diesel or natural gas fueled electric power generation. Nevertheless, Alaskans have repeatedly achieved higher renewable penetration levels than has been possible in nearly any other place in the world, under incredibly harsh conditions including daylight hours that shrink to a couple hours a day during some seasons and wind resources that can exceed 100 miles an hour and literally tear apart wind turbines not robust enough to stand up to such harsh circumstances.

Many Alaskan utilities have set up voluntary goals to reach 70 or 80% renewable penetration within the next 8 to 10 years. Kodiak Electric Association reports that it has achieved 99.7% renewable energy penetration in a hybrid wind/hydro/diesel/battery/flywheel microgrid so far in 2014.

Mainland U.S. utilities could learn a lot from their innovator compatriots up north, where the smart grid is already delivering on the promise of a more cost effective and sustainable power grid today.

©2016 Peter Asmus. Photo credit: David Clites. Website by: